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Economists, meet Sara. She is in her early 50s, white, an office manager who lives in South Carolina and a Republican who is unenthusiastic about Donald Trump. When she thinks about the direction of the country right now, what she’s most worried about is the economy. And whom does she blame for the economy?
Politicians in Washington, D.C., collectively. They have lost sight of how we live and work as middle-class people. We can give free Narcan to whoever we want to in the parking lot of McDonald’s because they’re OD’ing, but we cannot get diabetic medication to those kids who did not choose to be diabetic. People are losing their jobs and can’t afford health care, and you’re going to legislate whether or not somebody can read a book?
There is a lot to unpack in that angry paragraph, which came from a focus group, convened in September by Times Opinion, of 13 Republican voters who are looking at candidates other than Trump. (More of their responses here.) On diabetic medication, for example, there’s actually good news. The Inflation Reduction Act capped the cost of insulin for Medicare recipients at $35 a month. Lilly, Novo Nordisk and Sanofi have cut prices for patients of all ages.
But the part I want to focus on is what Sara and other Americans who aren’t economists mean when they use terms like economy, inflation and unemployment.
It’s often not what economists mean. And I think the differences in perspective go a long way toward explaining why President Biden receives such poor marks on the economy despite strong growth in the country’s gross domestic product, as well as low unemployment and falling inflation.
Ask a macroeconomist how the economy is doing and you might get a number, such as 4.9, which is the percentage increase in G.D.P. between the second quarter and third quarter, formulated as an annual rate. Ask Sara and you hear about politicians, Narcan, diabetes medication and book banning.
And Sara isn’t wrong! Bloodless as it is today, the word economy once had a moral valence. The ancient Greek word oikonomia means the management of a household, which was considered a deeply moral activity. “In ancient economic theory, an action is considered economically rational only when taken toward a praiseworthy end,” Dotan Leshem of the University of Haifa wrote in 2016 in the Journal of Economic Perspectives.
Or take inflation. To an economist, it’s a change in the general price level. If prices rise rapidly and then plateau for a few months, an economist will say monthly inflation is zero. To the general public, that’s still inflation, because prices are high. A shopper might not be happy until prices go all the way back to where they were — which to many economists seems like a scary thing to wish for, because deflation tends to go along with depressions.
And unemployment? To an economist, it’s the familiar rate that the Bureau of Labor Statistics refers to as “U-3”: an objective measure consisting of the number of people who are out of work but actively searching divided by all those in the labor force. The U-3 was just 3.9 percent in October, which is lower than the rate Federal Reserve policymakers see as sustainable in the long run. Yet 57 percent of people in an ABC News/Washington Post poll in September said that the unemployment rate was not so good or poor.
Pollsters have long observed that voters who are unhappy in general will tend to express unhappiness in every answer, and not attempt to make fine distinctions. “People will default to the most pessimistic view: Sure, I can find a job, but it doesn’t pay a damn thing,” Michael Murphy, a Republican strategist in the Never Trump camp, told me.
Which brings us to a bar chart I made based on data from the New York Times/Siena College polls of voters in battleground states. The polls, which alarmed many Democrats, showed Trump with leads in five of six important battleground states that Biden won in 2020. Biden has been campaigning on his economic record — job creation, infrastructure investment and so on — but the polls show that voters trust Trump more than Biden on the economy.
“Whether they’re right or they’re wrong, the perception is that the economy is doing very poorly,” Don Levy, director of the Siena College Research Institute, told me.
The low mark that Biden gets from white people with no college education is consistent with what I wrote about in Monday’s newsletter: Less educated voters have turned away from the Democratic Party en masse. Ironically for Biden, he seems to be getting dinged for a New Democrat strategy of “compensating losers” that he himself doesn’t buy into. (Biden does pretty well with nonwhites who have no college education, perhaps because they feel their nonwhite identity more strongly than their no-college identity.)
Trump may also be benefiting from rose-colored hindsight. More voters have a favorable impression of Trump’s overall record now (48 percent) than they did when he left office (38 percent), according to the ABC News/Washington Post poll.
I asked Representative Ro Khanna, a progressive Democrat from California who represents Silicon Valley, about the Times/Siena poll results. He said he thought Trump beat Biden on the economy in voters’ minds because “Trump, as hollow as he is, without a single idea, positioned himself as this outlaw, questioner of institutions, challenger of the status quo. He has that brand that appeals to people’s grievance.”
A Blueprint/YouGov poll, conducted around the same time as the Times/Siena polls, has more bad news for the Democrats. (Blueprint is a new project of Reid Hoffman, a co-founder of LinkedIn.) The poll results, first reported by Semafor, found that voters care most about inflation and least about jobs, yet believe that the Democrats are focused least on inflation and most on jobs.
As for the decline in inflation that Biden brags about: Only 38 percent said they believed the official statistics, against 62 percent who didn’t.
That disbelief says a lot. I don’t think it’s entirely a measure of distrust in the statistical agencies. I think it’s deeper than that. People are saying that, for whatever reason, prices went up. And they’re saying they can’t make ends meet. Anyone who tries to tell them that inflation has fallen is going to be ignored, or worse. Which means the incumbent president is in a bad spot.
Elsewhere: China Loses U.S. Market Share
China’s share of goods imported by the United States fell to 16.5 percent last year from 21.6 percent in 2017, while Vietnam had the biggest percentage-point gain over the period, according to United Nations Comtrade data analyzed by Laura Alfaro of Harvard Business School and Davin Chor of Dartmouth College’s Tuck School of Business. However, China has stepped up trade with and investment in Vietnam as well as Mexico, a major source of U.S. imports, they note, adding, “This means that the U.S. could well remain indirectly connected to China.”
Quote of the Day
“The banking sector has stabilized since the period of acute stress earlier this year, and the system as a whole has ample capital and liquidity to withstand shocks. I continue to monitor the system for signs of renewed stresses.”
— Lisa Cook, a governor of the Federal Reserve (Nov. 6, 2023)
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